- Japanese tech giant Softbank has committed an additional $US3 billion to WeWork in a deal that would give the office sharing company a valuation of around $US42 billion.
- According to third-quarter financials seen by Business Insider, WeWork has substantially increased its revenue but its losses have more than tripled.
Office sharing firm WeWork has secured an additional $US3 billion from Japanese tech giant SoftBank, bringing its total funding and commitments to $US6.4 billion.
The SoftBank cash comes in the form of a warrant, giving WeWork the option of new cash in the first half of 2019. The warrant automatically converts to stock in September at a price that gives WeWork a valuation of around $US42 billion – provided the company doesn’t go public or sell in the meantime.
WeWork described the funding as “opportunistic financing” available to the company on attractive terms. Business Insider first reported in June that WeWork was in talks with SoftBank to raise further funding at a $US35 billion valuation.
According to third-quarter financials seen by Business Insider, WeWork has substantially increased its revenue but its losses have more than tripled.
Here are the key numbers from WeWork’s Q3 2018 financials:
- Revenue: $US482.3 million, up from $US241 million
- Net loss: $US1.2 billion, from $US322 million
- Total revenue over the last 12 months: $US1.5 billion.
- 297,000 occupied desks out of an available 385,000.
WeWork has played up its rapid expansion, with the office sharing firm now present across 83 cities and 24 countries. The firm has made its name by taking over large properties and doing them up in a bright style, then offering flexible co-working spaces ranging from hotdesking to private offices. It is increasingly using its massive cash pile to target bigger enterprise clients, and take on corporate makeovers on behalf of blue-chip firms, as it looks to more sustainable and diverse revenue streams. Enterprise clients now make up 29% of WeWork’s user base, according to its investor deck.
The new funding from SoftBank comes after the firm invested in $US1 billion in convertible debt in August. SoftBank and its technology investment fund the Vision Fund also invested $US4.4 billion in WeWork in 2017.
The company said it had seen improved occupancy rates, a key metric for investors worried about tenants leaving after a short period and saddling WeWork with expensive lease commitments. The firm said it had seen an 84% occupancy rate, despite adding more desks.